Millions of households could see power prices fall in the coming year as falling costs for generation have declined from the “extreme peaks of 2022”, the Australian Energy Regulator says.
The regulator released its draft default market offer for the 2024-25 on Tuesday, setting a guide for electricity prices in New South Wales, South Australia and south-east Queensland. Victoria was expected to reveal its equivalent default prices soon.
The majority of residential customers can expect price cuts of between 0.4% to 7.1%, while most small business customers could see reductions between 0.3% and 9.7%, the AER said. Price changes, though, may hinge on location and type of load demand.
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AER’s chair, Clare Savage, said the draft decision took into account wholesale and network costs, environmental and retail costs. The default price sets a benchmark for residential and business customers.
“We know that economic conditions have put pressure on many Australians and the increases in electricity prices over the last two years has made energy less affordable for many households,” Savage said. “In light of this, the AER has, in this decision, placed increased weight on protecting consumers.
“While wholesale markets have stabilised since their extreme peaks of 2022, this easing has been offset by the pressures we are observing in network prices,” she said. “Poles and wires costs are a large component of retail prices, comprising around 40% of the price.”
Electricity prices had risen more than 20% in each of the past two years, including an AER decision that the Morrison government postponed until after the 2022 election.
The Albanese government has also sought to take the sting out of electricity price increases by offering rebates for many consumers. In the December quarter of 2023, power prices were 6.9% higher than a year ago. Excluding the Energy Bill Relief rebates, electricity prices would have increased 17.6% over this period, the Australian Bureau of Statistics said.
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The AER will release its final decision on the default market offer in May.
The regulator said network cost increases were driven by inflation and interest rate rises. NSW’s roadmap for speeding up renewable energy projects also added to costs.
“Our draft determination should still allow a retailer to recover their costs and make a reasonable profit with a retail margin of 6% for residential plans and 11% for small business plans,” Savage said. “These are higher margins than we see in other markets, such as Victoria, where strong competition remains.”
2024-03-18 15:33:33
Source from www.theguardian.com